China and Private Equity Investment
Carlyle Group Sees China as Best Private Equity Destination
This has been a big year for China and private equity despite the dismal economic climate. China's national pension fund has invested in four private equity firms this year and the fund's manager has promised, "The social security fund won't stop investing in PE in the future." And buyout funds are returning the favor, led by Carlyle Group, taking both minority and majority stakes in Chinese companies.
David Rubenstein, co-founder of Carlyle Group, has selected China as the most desirable location for private equity investment. Rubenstein said at a recent conference, "I regard China as the single most attractive place in the world for us to invest at the moment." His buyout firm is a testament to this belief, last year Carlyle agreed to invest $87 million in a Shanghai-based chemical company, as well as committing $50 million to a private education firm in China. It has bought a minority stake in a Chinese infant formula producer. And with Carlyle raising $1.04 billion for a fourth Asian development fund, more deals in China are expected. So, it is little surprise that Rubenstein is so optimistic about the outlook for private equity investment in China. Other buyout firms are active in China too; KKR, Sequoia Capital and other funds have invested over $1 billion combined in China's dairy industry.
The U.S.-based private-equity fund, which has more than $86.1 billion under management, is planning to expand its presence in China by setting up a yuan-denominated fund.
"For any of the large private-equity firms in the West to be a real player in China you probably should have a RMB fund," he said, using another name for China's currency.
Until now, Carlyle's investments in China--as with most foreign private-equity firms--have been from funds raised in dollars outside of China. Yuan-denominated funds will allow foreign firms to avoid a lot of regulatory red tape while accessing China's massive domestic savings.
Rubenstein said that over the last two years Carlyle has invested $2.5 billion in China in 47 deals.
Speaking on the eve of U.S. President Barack Obama's first visit to China, he said that the U.S.-China relationship is the "best it's ever been."
"Right now the Obama administration has excellent relations with the Chinese government." Source
Also see Blackstone Group in China.
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Tags: private equity china, private equity development, asian private equity investment, buyout capital buyout investment, private equity firm Carlyle Group, Blackstone
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